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Prime Wealth sees 'turning point' for Tullow shares

Prime Wealth Group has labelled Tullow Oil as a 'buy', saying that Wednesday's production update and asset sales mark a 'turning point' for the shares.

Tullow announced an agreement to sell stakes in two North sea oil fields, farming down 53.1% of its Schooner unit interest and 60% of its Ketch asset to Faroe Petroleum.

The company also confirmed that its full-year guidance remained at between 79,000 and 85,000 barrels of oil equivalent per day following a good performance since the start of the year.

"Tullow Oil shares have effectively been falling steadily since mid 2012 highs around 1,500p, as unsuccessful drilling campaigns and other hitches put an end to a long bull run for the explorer," said Luke Dods, Senior Trader at Prime Wealth.

"Today however, most of the uncertainty has been removed by the sale of the Schooner and Ketch gas fields, enabling the group to redouble focus on its Kenya successes, and put the group on a strong financial footing."

From a technical point of view, Dods said that the stock has continued to trade above its 100-day moving average at 823p, and if it goes on to "recover" the 200-day moving average at 897p then a return to September's levels of around 1,050p should be on the cards in the next four to six weeks.

"Prime Wealth believe that today marks a turning point for Tullow Oil shares, and a recovery of the 200-day moving average on an end of day close basis will add further credence to our view."

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